I am saddened to see the tone of comments. So many people so eager to blast this submission out of the water. So much passion. I, for one, would have more respect for some of you just came out and said "I don't like minorities". Where's your courage? Anyways, here's a quote and a link; I can't personally guarantee either's accuracy.
"Now, what kind of American is 'sub-prime.' Guess. No peeking. Here's a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren't stupid - they had no choice. They were 'steered' as it's called in the mortgage sharking business."
[www.gregpalast.com]

Corporate Tactic, rip off those who are unlikely to fight back. State Farm had to fight a huge punitive damage award in the US Supreme Court of over $120 million for intentionally not paying claims by focusing on the weak; on old people, minorities, and low educated people.

To say the least the only evidence was a manual that was not burned at corporate headquarters from a whistle blower.

Countrywide is smart, like State Farm they will hire someone to book burn away any liability and potential lawsuits. BETTEACT QUICKLY AND SUE THEM!!

A contrary view (obviously also opinion) - same bad tan, though:

[www.nypost.com]

@daniinpa: Every discussion of subprime lending on this site has to devolve into a bunch of people screaming about irresponsible borrowers and how they have a 2% APR on their fixed-rate mortgage and they're so much smarter than all these other people who were, you know, lied to. It's a law.

The other law is that any discussion of racism has to devolve into BUT WHY CAN'T I GET A SCHOLARSHIP FOR BEING WHITE, as if there were a government office handing out free money to people who pass the paper-bag test.

Fox loves to do this with captions on the screen that say things like "If Hillary wins, have the terrorists won?"

You have too much pent-up frustration. Get laid and cool off before you post some more angry posts will ya? Your posts might make more sense that way.

If they didn't want them, why did they take out the loans? Or did Countrywide just send them wads of bills through the mail and expect people to pay it back?

Or require everyone to shop at at least two different brokers/lenders before closing. Of course you can't force, but then you wonder why do few actually do it and turn around and complain that they were steered.

Another factor is that white customers are far more likely to shop around when looking for a mortgage rate (yet another result of having better historical resources.)

Let me give you an example here, and this is capitalism at work.

Two customers. One white, one black. 680 credit scores, 10% down, $300k mortgage. The broker offers both the same 6.5% mortgage. Both customers qualify for 6%, but that .5% extra pays the broker 3k. The white customer opts to shop around. He finds that the broker across the street is willing to make less on the deal and give 6% to steal the business.

Now the white customer is paying the rate he "qualifies" for while the black customer is being "steered" into a higher rate. In reality this is just how the business world works, you have to work to save money.

You want to fix the mortage industry? Force EVERYONE buying or refinancing a home to take a multi-part financial management program run by an independent organizations (Temples/Churches/Mosque tend to offer them).

Yet another mortgage article that misses the point...NO WAY this is true.
The truth is Countrywide did not in any way, shape or form discriminate against any customers, for any reason.
They tried to fuck everyone equally.

They've done studies in the past couple of years showing that lenders have consistently steered minorities into subprime loans despite their qualifications. A white person and a black person presenting the same income bracket, the same down payment, and the same approximate credit rating will get different loans.

So can we avoid turning this into "let's slag on the black borrowers for having crap financial skills"? Because that's not actually what's going on here.

Center for Responsible Lending study

I went to get a loan and they asked my race
I wrote down human inside the space
It's a disgrace how they try to debase
It ain't the bank's damn business how my lineage trace
-Beastie Boys

(although I do understand that the federal regulations need race to verify that racist policies are not in place)

@Tracy Ham and Eggs:

Not true about Full Spectrum. Countrywide loan officers get paid when a Full Spectrum loan goes through.

Unfortunately, that would require some of our resident experts to actually look something up. It appears treating one's opinion as fact is far more easy and satisfying.

The law that requires the race field on the form is called the Home Mortgage Disclosure Act. Get your facts straight before you accuse someone of making stuff up.

@LadyCarolineLamb:
I Don't understand how you can make these comments and then suggest that there could not be any racism going on with the Countrywide issue above. Seriously?

And I'm sure Countrywide was not doing it with the intention of "hating on the black man", but was merely taking advantage of a stereotype. Black people are more likely to get the crappy end of the credit stick. Ask one some day, randomly, and I'll bet you money that they have had problems with getting credit.

Because companies can get away with it, because people who have never dealt with it can't believe that it happens in this day and age.

It does. Get over it and move on. You're stopping progress when you question the "victim" and don't focus on the "crime". Like the police badgering a woman in a skimpy skirt after she's been raped.

@mac-phisto: I do that too! Although sometimes I wonder what its doing to the ratio/formula that companies use to ensure they aren't being discriminatory.

Shadow, this post has nothing to do with medication, and neither should the discussion.
Got any?

Funny Consumerists starts a racially charged thread...even titles it accordingly, and they are appalled when the responses show critiques of conumers of both races that have poor spending habits? A little backward I should say...or maybe it is to just appease the word twisters that want to scream "racism" where it ISN'T there. YOU started the racially charged subject, Consumerist...why don't you "ban" THAT?

I"M PRETTY SKEPTICAL on this. I worked for a lender that sold loans to Countrywide and we had to run all our loans through their system for an approval (except FNMA or Freddie as that was optional) before we sold the loans to them. I never saw any type of disparity regarding this. Yes there was an area to mark off sex, ethincity and race but that is for HMDA reporting (also found on teh loan app/1003).

In fact I always found Countrywide's system (Clout for us) to be the easiest system to get an approval in vs Fannie Mae's Desktop underwriter or Freddie Mac's Loan Prospector since it graded self employment, credit profile and number of units (2-4) for the property the easiest. In my opinion that's probably why they have the default rates that they do is because their system graded applicants to easily vs the other systems out there.

@shadow735:

I think some people operate under the assumption that if a lender approves a loan or mortgage, that they can afford it and it is in their best interests. Or if a credit card company extends them a certain credit limit, they should go ahead and use it all. It comes down to personal irresponsibility with finances.

The MAN has spoken...roflmao.
Thou shalt not deviate from what we want you to hear...

@LadyCarolineLamb: its really sad that society went from work hard and save up to get it now deal with it later.
Its scary how people dig their own holes and cover themselves up. And we are talking about secured debt not unsecured Credit card debt.
And people roll unsecured into their homes.
I just dont understand it, people are willingly committing financial suicide and then they have the balls to accuse the mortgage companies of predatorial lending.

I do feel for some of these people but the fact is they acted irresponsibly.
People need to realize mortgage companies are there to make money, it their business. Its not their responsibility to budget your finances.
Where they are at fault is lax underwriting. Some loan products are just plain stupid and are not being used as they were intended to be used but that still doesn't excuse the borrower.
If you steal a candy bar from a store you cant tell the cops well they made the candy bar available so its partially their fault.
Its just sad.

If I were designing a system to adjust creditworthiness on the basis of race, if the input operator were to leave it blank, I'd probably select the worst possible tier for the calculations. Magically approved loans with leaving the race field blank is probably the same kind of coincidence that explains all the "funky" things happening during a full moon.

@LINIS:

Agreed. The problem we have here is that a single accusation by whomever, without any real evidence, can result in a virtual tar and feathering of a company. We don't know who this former employee is, or if he actually was an employee. Maybe he works for a competitor of Countrywide. Maybe he's some sort of troll.

Great post, Shadow. Did you see that "Debt Diet" couple Phil and his crazy wife Felic who had 6 kids...none of them had medical/dental coverage, and they were in hundreds and thousands of dollars in debt so she could get manicures, faux tans, and clothes that even Paris would be embarrassed to wear (Felice is pushing 40, BTW). The list extends FAR from those things too...birthday parties where she had special snow shipped in...just nuts. ...And she was a former MORTGAGE BROKER. Argh
[www2.oprah.com]

@Amiga: Innocent until proven guilty. With a accusation like this, there needs to be FAR more evidence. Maybe you need to stop thinking everyone in the world is out to screw you.

Precisely, CLAYS.

@Coder4Life: thats never going to happen Mr Angelo has made millions upon millions after all he founded Countrywide

@nequam:

I think the point she was trying to make is that scholarships are often not based on academic achievement. That was the reason she put quotation marks around the word "scholar".

@bohemian: you obviously are only looking at one side of the coin, All these poor me I was taken advantage of borrowers that are in default and foreclosure didnt take the time to act like an adult, actaully read the loan docs and make sure they understood the loan they were signing.
They didnt budget their money, they bought a home no money down 100% financing they didn't plan and look at the future when the loan reset to see, "Can I make those payments" they based their decisions on the ability to refi in two years and on increasing home prices.
Does this sound like gambling to you?
Oh and the excuse, "Oh but I didn't understand the loan docs so its not my fault that they are not written in a language I can understand"
Hello these are legal documents, not a childrens book.
If you cant understand the loan docs Hire an attny to go over them with you.
Then comes the well I cant afford an attorney. WHAT? So then why are you buying a home.
Sorry man but the majority of the fault lies on the people that bought outside their means, that used their House as an ATM to get all those cool toys, vacations and home improvements.
What Countrywide did wrong was jump on the subprime band wagon in order to keep ahead of everyone else.
Making loans available to people that treated home buying like going thru the drive thru for a burger.
Its called personal financial reasonability and people lack that.
Face the music, if these people were denied the home loan you better believe they would have cried foul till the govt stepped in.
I get really pissed at people that blame all the mortgage companies and conveniently forget about the greed of the borrowers. In the end the buck stops at the borrowers signature. That is unless outright fraud is involved and that is a jail time offense.

@Chris Walters: You think so, huh? SO the "provacative non-pc posts" that you like so much, should be censored, while the extreme liberal posts twisting those words keep going? Piss off

On topic, I agree with Tracy Ham and Eggs that the "white customers were more likely to be second or third generation owners, and thus had a better reference base to negotiate." At least on the minority side, many new minority homeowners are first generation homeowners.

And although you and I may know where to find the tools to help you better negotiate a deal, many 1st-Gen. minority homeowners do not. They can easily find tools to get you into a home (especially with all of the predatory practices in the industry). But they may not know where to turn for expert advice (again, it's difficult with all of the predatory practices).

Also, College Education alone does not help the BLACK "scholar" avoid the Lender who holds attitudes similar to yours and steers the 1st-Gen-er into a BAD LOAN (which is indistinguishable from a GOOD LOAN to the novice).

Rampant is a bit of an over-exaggeration. According to a national study by the General Accounting Office, only 0.25 percent (that's one quarter of one percent for the math challenged) of all undergrad scholarship dollars come from awards that are restricted to persons of color alone.

Seems quite the opposite of rampant...and from what I understand, these are usually privately funded -- so you aren't even paying for it. Seems like fair compensation for having to live in a world of racist morons.

@LadyCarolineLamb: Um, you are the one that brought up scholarships and took this off topic. How generous of you to bring us back.

@LadyCarolineLamb: Nice use of the quotes around scholar; you've left no question as to your attitudes toward blacks. What on earth are you talking about? Give an example.

Both during the phone application process and on the actual paperwork there are specific questions asking your race. In both cases (phone and paper) it is made *very clear* that providing the data is optional and that it is used by the gov to gather statistical data on lending practices.

So it's not suprising that "race" is a box on some loan processing screen.

The interesting thing about this (so far unsubstantiated) claim is that different loan terms were offered depending on the value reported in the race field. That would be a *major* story if true and is certainly incredibly illegal.

The real story we need to be looking into is if the claim about internal systems reporting different loan terms based on race is true. Hopefully we'll hear more about this from internal people or another whistleblower.

Ah, come one guys! Didn't you learn anything from Ave Q?

Everyone's a little bit racist

...so they don't end up in loan situations like this (to bring it back to the POINT and TOPIC)

(meaning people who actually WANT to learn and better their situations)

Um, NEQUAM. The many many named BLACK "scholar"ships are what are rascist, so redirect your temper. It is time that SCHOLARships got back to being for SCHOLARS of all races.

I get your larger message, LadyCaroline, even though your delivery is bordering on the antagonstic. But I the "reverse racism scholarships" thing kind of casts a pall over anything you might have been trying to say. It's kind of messed up.

THANK you HRHKingFriday, EXACTLY my point. Politically correct I am not, but neither am I rascist, Tracy chose to ignore my equal comments about the Nascar loving Paris-Hilton aspiring types because that is how it works with people like that.
I recently went back to college, only to see groups of people given full scholarships (NOT for scholarship BTW) who skipped almost all classes, then show up on the last day and wonder why they weren't getting an A...kid you not. It was rampant, and each semester in rotated a new group pouring $$$ down the toilet that could have actually improved their lives. NOT working their way through like everyone else. Then you have the sleazy Paris Hilton wannabees using financial aid vouchers to buy cropped tees in the bookstore, along with their free books...then bragging in class about the $700 purse they just bought.

I can't even stand looking at this guy's picture. Hopefully he never gets a job anywhere else and goes home and has to file a bankrupcy and live on the streets himself.

@LadyCarolineLamb: "Go get your free education (which is paid for by rampant reverse racism 'scholarships')..." Maybe that's what Tracy Ham and Eggs saw. It doesn't take any "reading into" to recognize that as a provocative statement. Please explain a way to interpret "rampant reverse racism 'scholarships'" as being race-neutral.

Bad credit racism: A bannable offense, lol

WRONG "Tracy Ham & Eggs" as usual, reading into it what you WANT to see

@LadyCarolineLamb: Well that was just as racist as any accusation in the article. Enjoy your banning

The only way they were being predators here were to go after idiots that had horrible credit and live way above their means. Do I agree with these loans? No WAY...but this is no different than the payday loan places. There are PLENTY of these types of dolts and scumbags that think the world owes them a house, even though they can't get approved for legitimate loans...people of ALL races. This bling-bling world-owes-me-a-living craze has GOT to stop. Go get your free education (which is paid for by rampant reverse racism 'scholarships') then a decent job and THEN go buy a house. I am sick of the 'gangstas' and white trash set bringing this economy to its knees so they can pimp their cribs and have a big house to fit their 60" tvs so their Nascar friends have a place to worship Earnhardt

This guy is outright lying. The Countrywide Approval system (CAUS) IS automated, and there is no place within it for race. Additionally, while race is able to be noted in the 1003 it is not required.

Fees and points are determined by the individual loan officers (who also had some say in the rate). I do not doubt that there may have been some racial disparity in fees charged, since most sales people were white and people natural tend to favor people they relate too. That said, the more knowledgable customers were able to negotiate better deals and white customers were more likely to be second or third generation owners, and thus had a better reference base to negotiate.

Additionally, lenders with countrywide would not have made any money if a deal went over to Full Spectrum, so their incentive was always to keep the loan if possible, not hand it off.

This sounds like someone who was fired trying to smear a company.

So basically these borrowers made poor loan choices (like most borrowers in the past few years, regardless of race) but now are trying to play the race card and claim CW "forced" them to make bad choices - WTF!? if you didn't like the terms of the loan, why did they sign it, why not go to another lender?

Oh, I forget, this is America - land without personal responsibility...

This is the Catch-22 of the blog world, I suppose - you have the freedom to run stories without being expected to fact-check them as thoroughly as a newspaper would, because blogs are expected to move info along very quickly. But without fact-checking, all the story really needs to do is seem plausible to *someone* in order to be published.

I'm not saying this story *has* to be false. It could certainly be true. But does it seem a little too facile, a little too late? Yeah, kinda.

So, grain of salt and all that, when reading blogs.

I would be surprised if a company would be stupid enough to encode such discrimination into their computer system, but that doesn't mean it's not a possibility.

If this was just a disgruntled former employee, let's see how anonymous she remains when the subpeona comes in....

eligiBle

D*mned if they do, d*mned if you don't. These racists posing as "civil rights groups" would be shouting from the rooftops if Countrywide DIDN'T offer loans to the types of people only eligle for the sub-prime types. If I were in charge there would be NO subprime loans, but especially no loans of ANY type to people of ANY race who happen to have dubious credit. They and the excessive press coverage that they generate are making it impossible for responsible homeowners to sell their homes.

There really are a couple of separate issues here: 1) did CW engage in racist (or otherwise unfair) practices; and 2) did it happen in the manner described by the former employee -- i.e., that the system denied loans based simply on the input of race information. What is described is different (mechanically) than identifying certain zip codes based on expected racial makeup. It is not better or worse, just far more brazen and, I believe, unlikely to have occurred in the manner described.

huh??

all that quote says is that that minorities making decent money made stupid decisions (to get an ARM mortgage). hell, if i would have wanted an ARM or requested one i'm sure the bank would have given me one. they make a ton of money off the ARM loans that don't default.

from the NCRC report: "If a consumer is a minority, particularly an
African-American or a Hispanic, the consumer is most at risk of receiving a
poorly underwritten high-cost loan."

what happened to the responsibility of the applicant? he/she/they made the choice, right?

I am sure a huge company based in calif would put thier focus on putting african american's into bad loans just so they can make sure that the KKK get some satisfaction.
Its not like they want to stay in business or anything.

did you get laid off my countrywide?

There's some meat here, too much, in fact. I believe Baltimore is going after lenders for basically the same thing. Then, after foreclosure, the lender refuses to maintain the property. This leads to its occupation by homeless, drug dealers, etc. bringing overall property values down and outright endangering neighbors. All-in-all, evil.

The suit in Baltimore involves Wells Fargo. But it is by-and-large the same set of circumstances. What an evil lot those that pursue profit and shareholder value can prove to be. How unfortunate so many are so connected to this pile of dung. It reminds me of the tobacco debacle, with retirement funds country-wide having vested interests in keeping big tobacco afloat. This time its evil bastards like this. From the Washington Post:

The city of Baltimore yesterday sued a major national lender for engaging in what it describes as abusive practices that have created a foreclosure crisis in black neighborhoods and eroded city coffers.

The suit, filed against Wells Fargo Bank in U.S. District Court, is thought to be the first of its kind brought by a major city against a national lender and could inspire similar litigation elsewhere, consumer groups and city officials said.

The city alleges that Wells Fargo violated fair-housing laws by targeting minority neighborhoods and placing borrowers there into loans they could not afford, a practice called "reverse redlining."

The lawsuit, which seeks class-action status, was filed in U.S. District Court in Los Angeles.

It demands a court order barring the lenders from discriminating against blacks and compelling them to comply with fair housing and credit laws.

Among the defendants named in the suit are Ameriquest Mortgage Co., Citigroup Inc., HSBC Finance Corp. and Washington Mutual Inc."
[www.iht.com]

As mentioned before, it's not illegal to ask for race, it's just not required input. This correlates with this guy's statement that if he didn't input race, he was able to get better loans for his customers.

Unsubstantiated rumor posting is one thing - I don't think that's what this is. If it is untrue, however, it would be simple for Countrywide to prove so.

Maybe the fake and bake fried his brain

@Petrarch1603: Yeah, this doesn't pass the smell test. But maybe it's just because I believe that, if a company intended to follow racist lending practices, they would not be so blatant about it as to set up a system that disqualifies a loan applicant based solely on an input in the race field. Then again, stranger things...

@Dibbler: You can have input, for statistical purposes and (believe it or not) protection from redlining. They have it for the same reason they ask for race during employment applications- to prove that they're not racist. Of course, with the right computer programming, I'm sure they can get that input to produce certain loan availability.

You are not required to furnish this information, but are encouraged to do so. The law provides that a lender may not discriminate either on the basis of this information, or on whether you choose to furnish it.

Found the form here:[www.efanniemae.com]

that dude needs just a little bit more tanning bed.

The race field is required on the government 1003 (loan application), and if people refused as guess was to be taken later. This is supposed to be done for government statistics.

FTA: "And these are the guys Kenneth Lay is so eager to wed Bank of America to?"

Kenneth Lay, the dead Enron guy? I doubt it.